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CIRCULAR No. 39/2003/TT-BTC OF APRIL 29, 2003 GUIDING THE FINANCIAL MECHANISM APPLICABLE TO ENTERPRISES OF PUBLIC PASSENGER TRANSPORTATION BY BUSES IN URBAN CENTERS

Pursuant to the current tax laws;

Pursuant to the Government's Resolution No.13/2002/NQ-CP of November 19, 2002 on measures to check the rise in and proceed to gradually reduce traffic accidents and congestion;

Pursuant to the Government's Decree No.56/CP of October 2, 1996 on State enterprises engaged in public-utility activities;

In order to encourage and create conditions for enterprises operating in the field of public passenger transportation by buses in urban centers, the Finance Ministry hereby provides guidance as follows:

I. GENERAL PROVISIONS

1. Subject to the application of this Circular are enterprises of all economic sectors, which are engaged in public passenger transportation by buses in urban centers, including:

- State enterprises, including:

+ State enterprises engaged in public-utility activities of public passenger transportation by buses.

+ State enterprises' sections engaged in public-utility activities of public passenger transportation by buses.

+ State enterprises engaged in business activities and participating in public passenger transportation by buses.

- Enterprises of other types participating in public passenger transportation by buses such as transport cooperatives, joint-venture companies, limited liability companies, joint-stock companies....

2. State enterprises and public-utility State enterprises engaged in public passenger transportation by buses shall comply with the provisions in Circular No.06/TC-TCDN of December 24, 1997 of the Finance Ministry guiding the financial management regime for public-utility State enterprises and the provisions in this Circular.

3. Passenger bus transportation enterprises which organize other production and business activities shall have to account separately revenues, expenditures, business results and fulfill the State budget remittance obligations as prescribed.

4. Enterprises engaged in public passenger transportation by buses are entitled to enjoy policies of preferences on land rent, land road and bridge tolls, stop and parking yard fees under the current regulations and decisions of competent agencies.

II. SPECIFIC PROVISIONS

A. INVESTMENT, MANAGEMENT AND USE OF CAPITAL, ASSETS

1. State enterprises tasked to conduct public-utility activities of public passenger transportation in urban centers shall have to open books and record accounting books to accurately monitor all available assets and capital according to the current book-keeping accounting and statistical regimes for the performance of the task of public passenger transportation by buses.

For State enterprises which have sections engaged in public-utility activities of public passenger transportation by buses, those sections must organize separate accounting.

2. State enterprises and enterprises of other economic sectors, which invest their own assets for participation in activities of public passenger transportation by buses in urban centers shall be entitled to enjoy investment preferences under the (amended) Domestic Investment Promotion Law No.03/1998/QH10 and be given post-investment interest rate support under the guidance in the Finance Ministry's Circular No.51/2001/TT-BTC of June 28, 2001 guiding the implementation of the Prime Minister's Decision No.58/2001/QD-TTg of April 24, 2001 on post-investment interest rate support (if enterprises borrow capital for investment).

B. FINANCIAL RESULTS AND HANDLING OF FINANCIAL RESULTS

1. Turnover from public-utility activities of public passenger transportation by buses in urban centers:

1.1. For public-utility State enterprises or public-utility sections of State enterprises, their turnover shall include:

- Turnover from sale of bus tickets (single trip tickets, route ticket, inter-route tickets).

- The State’s price subsidy.

1.2. For enterprises of other economic sectors, their turnover shall include:

- Turnover from sale of bus tickets (single trip tickets, route tickets).

- Value of public-utility product purchase contract.

The bus ticket prices shall be set by the People's Committees of the provinces or centrally-run cities.

2. Expenses for public-utility activities of public passenger transportation by buses

Expenses for public passenger transportation activities of the passenger bus transportation enterprises are reasonable and valid expenses under the provisions in the Finance Ministry's Circular No.18/2002/TT-BTC of February 20, 2002 guiding the implementation of the Government's Decree No.26/2001/ND-CP of June 4, 2001 and Decree No.30/1998/ND-CP of May 13, 1998 detailing the implementation of the Enterprise Income Tax Law.

To suit the reality of activities of public passenger transportation by buses, a number of expenses are prescribed as follows:

a/ Expenses for wages and wage allowances:

+ Wages in the State enterprises shall be determined as follows:

- The basic wage: To be determined according to the Government's Decree No.26/CP of May 23, 1993 temporarily providing the new wage regime in enterprises; Decree No.28/CP of March 28, 1997 on renovating wages and incomes in the State enterprises; Decree No.03/2003/ND-CP of January 15, 2003 on adjustment of wages, social allowances and further renewal of wage management mechanism, and the Labor, War Invalids and Social Affairs Ministry's circulars guiding the above decrees.

- The allowances include the increase coefficients of the minimum wage, hazardous allowances, travel allowances, responsibility allowances, which shall be determined under the guidance of the Ministry of Labor, War Invalids and Social Affairs.

The provincial/municipal Services of Labor, War Invalids and Social Affairs shall have to guide enterprises in the implementation thereof.

+ For enterprises of other economic sectors: To comply with the State's regulations applicable to each type of enterprises and to be entitled to apply the provisions on wages like the State enterprises in the estimation of the costs of public-utility products.

b/ Fixed asset depreciation: Fixed assets being mass transit buses shall be depreciated according to their actual use capacity (by operating shifts), but the depreciation thereof must not exceed the level prescribed in Decision No.166/1999/QD-BTC of December 30, 1999 of the Finance Minister.

c/ Expenses for overhaul of fixed assets:

For fixed assets being mass transit buses, annually the enterprises shall be entitled to deduct in advance the expenses for overhaul of fixed assets, deduct in advance the expenses for inner tubes and tires according to quotas issued by competent agencies into their production costs and to retain the remainder of advance expenses for bus overhaul in the fiscal year upon the settlement thereof to carry out periodical asset overhauls.

d/ Enterprise management expenses shall include the expenses for the boards administering and supervising the operation of buses and the managerial apparatus of the enterprises.

e/ Other relevant expenses such as expenses for purchase of prints (bus tickets), civil liability insurance premiums, passenger insurance premiums and other expenses related to activities of public passenger transportation by buses according to regulations.

3. Handling financial results:

3.1. Mass transit bus enterprises may use turnover from public-utility activities of passenger bus transportation to offset the expenses for public passenger bus transportation activities, taxes and State budget remittance under the provisions of law (except the enterprise income tax).

3.2. The public passenger bus transportation activities in urban centers are not subject to value added tax.

3.3. The revenue-expenditure surplus (if any) of mass transit bus enterprises shall be handled as follows:

a/ Payment of enterprise income tax as prescribed by law.

b/ Deduction of valid expenses which are deductible when determining the taxable incomes as provided for.

c/ The remaining profits shall be handled as follows:

- For public-utility State enterprises; To be entitled to make deductions for setting up funds under the current regulations (Circular No.06/TC-TCDN of Feburary 24, 1997 of the Finance Ministry).

- For enterprises of other economic sectors: To distribute their incomes according to the State's current regulations applicable to each type of enterprise.

C. ESTIMATION OF EXPENSES AND SETTLEMENT OF PUBLIC-UTILITY

PRODUCTS

1. To estimate expenses for public passenger transportation by buses:

1.1. Basing themselves on the specialized techno-economic norms promulgated by the Ministry of Communications and Transport, the provincial/municipal Services of Communications and Transport (or Services of Communications and Public Works) shall organize the study of elaboration of appropriate norms for submission to the provincial/municipal People's Committees which shall promulgate techno-economic norms for bus operation in the provinces or cities.

1.2. Basing themselves on the techno-economic norms of bus operation, promulgated by the provincial/municipal People's Committees and on the reasonable expenses mentioned at Point 2, Part B, Section II of this Circular, the provincial/municipal Services of Communications and Transport (or Services of Communications and Public Works) and the provincial/municipal Finance-Pricing Services shall estimate expenses for public passenger transportation activities according to the implementation year or implementation route for each enterprise, then submit them to the provincial/municipal People's Committees for approval, which shall serve as basis for price subsidies or signing of contracts and expense payment in cases of goods ordering or bidding for carrying out public-utility mass transit activities.

2. Settlement of public-utility products:

2.1. The State's price subsidies:

For State enterprises or sections of State enterprises, which are engaged in public-utility activities of public passenger transportation by buses, if their turnover from sale of bus tickets are not enough to cover the public-utility activities, they shall be provided with price subsidies by the provincial/municipal People's Committees from the local State budget. The annual price subsidy level shall ensure the coverage of reasonable expenses prescribed at Point 2, Section B, Part II of this Circular and the State's current regime.

The local State budget shall ensure adequate supply for two reward and welfare funds with two months' actual wages for laborers in the enterprises or sections of State enterprises, which are engaged in public-utility activities of public passenger transportation by buses.

2.2. Purchase of public-utility products:

For State enterprises and enterprises of other economic sectors where the State orders the purchase of public-utility mass transit products:

The ordering of purchase of public-utility products may be effected through decisions of the provincial/municipal People's Committees or may be authorized to provincial/municipal Services of Communications and Transport (or Services of Communications and Public Works) which shall sign contracts with public-utility enterprises. The signing of contracts shall be conducted before the enterprises carry out the public-utility activities.

Where in a city many enterprises register for participation in public passenger transportation by buses, bidding therefor shall be organized under the State's current regulations on bidding organization.

Based on the demands of the persons placing the order for public-utility products, the volume of services provided by enterprises and the estimated expenditures, the contractual value shall be the difference between the ticket sale turnover and the expenses for public-utility service- providing activities, with profits for public-utility enterprises. The State shall not make up for losses in cases where enterprises conduct public passenger transportation under contracts with revenues being not enough to cover the expenses. In case of profits, the provisions at Point 3.3, Section B, Part II of this Circular shall be complied with.

Public passenger bus transportation enterprises shall have to provide public-utility services according to goods ordering plans' norms, strictly observe the commitments in quantity, quality and sale at correct prices... prescribed by the provincial/municipal People's Committees.

3. The funding sources for price subsidies and purchase of mass transit public-utility products shall be ensured by the provincial/municipal State budgets under the provisions of the State Budget Law.

The allocation and settlement of mass transit bus public-utility products shall be effected by the provincial/municipal Finance-Pricing Services through the State Treasury system under the Finance Ministry's regulations guiding the regime of management, allocation, settlement of State budget expenditures via State Treasuries.

D. FINANCIAL SETTLEMENT AND BOOK-KEEPING EXAMINATION OF MASS TRANSIT BUS ACTIVITIES AT ENTERPRISES

1. Making financial reports:

Quarterly and annually, the enterprises which carry out public transportation by buses shall have to elaborate the financial settlement of the public-utility activities together with their financial statements according to the current regulations. The enterprise directors must be accountable to the State and law for the accuracy, truthfulness of their financial statements.

- The financial settlement of the public-utility activities shall be addressed to the provincial/municipal Services of Communications and Transport (or Services of Communications and Public Works), the provincial/municipal Finance-Pricing Services and Tax Departments as prescribed.

- The time for sending the settlements shall comply with the current regulations.

2. Examination of financial reports:

- For State enterprises: Annually, the provincial/municipal Finance- Pricing Services shall, together with the Services of Communications and Transport (or Services of Communications and Public Works), examine the settlement of the mass transit public-utility activities of enterprises in order to make records on price subsidies for the public-utility products in the year for enterprises.

- For enterprises of other economic sectors, the local tax offices shall examine the situation of fulfillment of the enterprises' obligations to make State budget remittances.

The enterprises shall have to observe the financial, accounting regimes and discipline in budget collection and remittance and ensure the accuracy and truthfulness of the financial statements as provided for.

The violations of the accounting regime, the financial revenue and expenditure regime, the State budget collection and remittance regime and other financial regimes shall be administratively sanctioned, economically sanctioned under law provisions.

III. IMPLEMENTATION ORGANIZATION

1. Apart from the separate regulations for mass transit public-utility activities prescribed in this Circular, the enterprises engaged in public passenger transportation by buses in urban centers must also observe other provisions of law for each type of enterprise.

2. This Circular takes effect 15 days after its publication in the Official Gazette.

If any problems arise in the course of implementation, the provincial/municipal People's Committees and enterprises are requested to report them in time to the Finance Ministry for consideration and appropriate amendments.

For the Finance Minister

Vice Minister
LE THI BANG TAM